International tax

Morocco Highlights 2016

Investment basics:
Currency Moroccan Dirham (MAD)
Foreign exchange control Transactions in foreign currency
generally are not restricted, but there are some administrative
formalities. Certain transactions, including the payment of
management fees, require the prior approval of the exchange
authorities. The export of MAD is prohibited.
Accounting principles/financial statements Moroccan GAAP.
Financial statements must be filed annually.
Principal business entities These are the limited liability
company, private limited company, general or limited partnership and
branch of a foreign company.
Corporate taxation:
Residence A company is resident in Morocco if it is incorporated in
Morocco or if its place of effective management is in Morocco.
Basis Morocco operates a territorial tax system. Companies (both
resident and nonresident) generally are subject to corporate tax only
on income generated from activities carried on in Morocco. Foreign
corporations are subject to taxation on income arising in Morocco if
they have, or are deemed to have, a permanent establishment in
Morocco.
Taxable income Companies are taxed on the difference between
their trading income and expenditure. Business expenses incurred in
the operation of the business generally are deductible, unless
specifically excluded. Expenses not permitted include interest on
shareholder loans where the stock is not fully paid up, interest on
shareholder loans in excess of the official annual interest rate, and
penalties and fines.
Taxation of dividends Dividends received by corporate
shareholders from taxable Moroccan-resident entities must be
included in business profits, but the dividends are 100% deductible in
calculating taxable income.
Capital gains Capital gains are treated as noncurrent income and
taxed at the normal corporate tax rate.
Losses Tax losses may be carried forward for four years from the
end of the loss-making accounting period. However, the portion of a
loss that relates to depreciation may be carried forward indefinitely.
Losses may not be carried back.
Rate The corporate income tax rate ranges from 10% to 31%. A
37% rate applies to leasing companies and credit institutions. A
foreign contractor carrying out engineering, construction or assembly
projects, or projects relating to industrial or technical installations may
opt to be taxed at 8% of the total contract price, net of VAT.

Surtax No
Alternative minimum tax There is no AMT, but the tax payable by
a company must be at a rate of at least 0.5%, regardless of the
amount of taxable profit, calculated on turnover, financial and
noncurrent income.
Foreign tax credit Foreign tax credits are available if so provided
in an applicable tax treaty.
Participation exemption See Taxation of dividends above.
Holding company regime Under the offshore holding company
regime, companies can be established in financial centers, provided
the exchange office is notified within 30 days of the date of
registration in the trade register. The main tax advantages available
to offshore holding companies are: (1) corporation tax of USD 500 per
year on their activities for the first 15 years; (2) a tax exemption on
dividend distributions and the transfer of profits abroad; (3) an
exemption from VAT; and (4) the same customs benefits and staff
rules as apply to offshore banks.
Incentives A variety of incentives are offered to encourage
Moroccan and foreign investors. Incentives include an exemption
from business tax for the first five years of operations for newlyincorporated companies, and a corporate income tax exemption for
companies exporting goods and services or operating tourist
establishments (subject to certain conditions) for the first five years of
operations, followed by a reduced rate on export sales.
There are several export and industrial free zones in the main cities
(Tangiers, Kenitra, Rabat, Nador, Fes, Layoune) that are open for
various activities. Authorized companies located in the export and
industrial free zones benefit from a business tax exemption for the
first 15 years, together with an exemption from corporate income tax
for the first five years of operations, followed by a reduced rate of
8.75% for the following 20 years.
An offshore financial center in Tangier is open to all international
banks and financial institutions that have obtained prior authorization
from the ministry of finance. Banks operating in the offshore financial
center are entitled to an exemption from registration fees and stamp
duty on initial share capital and subsequent increases, and on the
acquisition of premises for setting up a head office and branches,
provided the premises are retained for at least 10 years; an
exemption from VAT; an exemption from the trading license tax and
urban tax on buildings occupied by the head office or agency; an
annual corporation tax of 10% or USD 25,000 for the first 15 years;
an exemption from tax in respect of dividend distributions and
transfers of share proceeds; and customs duty exemptions.
Companies with the status of Casablanca Finance City are entitled

to a corporate tax exemption on sales turnover generated in foreign

currency and on capital gains arising from the transfer of foreign
securities for five years from the start of the tax year in which the
company obtained this status. After the expiration of this period, an
8.75% corporate tax rate applies.
Withholding tax:
Dividends Dividends paid to a nonresident are subject to a 15%
withholding tax unless the rate is reduced under an applicable tax
treaty.
Interest Interest paid on a loan from a nonresident is subject to a
10% withholding tax, unless the rate is reduced under a tax treaty. A
loan granted for 10 years or more is exempt from withholding tax.
Royalties Royalties paid to a nonresident are subject to a 10%
withholding tax unless the rate is reduced under a tax treaty.
Technical service fees See Other below.
Branch remittance tax A 15% branch remittance tax is imposed on
profits remitted to a nonresident head office unless the rate is
reduced under a tax treaty.
Other Companies that do not have their registered office in
Morocco are subject to a (final) 10% tax withheld at source on the
gross amount of the following: payments for technical assistance, or
technical, scientific or similar information; fees for the use of, or the
right to use, certain equipment; remuneration for the transport of
goods or persons from Morocco; and certain other commissions and
fees. Certain payments (e.g. rents and maintenance) related to
aircraft used for international transport are exempt.
Other taxes on corporations:
Capital duty No, but capital increases are subject to a 1%
registration duty.
Payroll tax Payroll tax (called professional training tax) is imposed
on the gross monthly remuneration of employees subject to social
security contributions, at a rate of 1.6%.
Real property tax No, but see Transfer tax and Other below.
Social security An employer is required to register its employees
with the social fund and pay social security contributions based on the
employees salary.
Stamp duty Legal documents subject to registration duty also are
subject to stamp duty at a flat rate of MAD 20 per sheet.
Transfer tax Registration duty at rates ranging from 4% to 6% and
a 1% real estate tax are levied on the acquisition of real property.
Other A 4% registration duty is levied on the sale of shares in
nonlisted companies.
Legal entities carrying on business activities in Morocco are subject to
business tax, which is based on the rental value of buildings,
premises, etc. used for the business and is levied at a rate of 10%,
20% or 30% of the rental value, depending on the entitys business.
Municipal tax is levied at a rate of 10.5% of the rental value of real
estate assets situated within urban districts and 6.5% of the rental
value of real estate assets in peripheral zones of urban districts.
Anti-avoidance rules:
Transfer pricing There is no formal transfer pricing legislation in
Morocco, but transactions between related parties must be on arms
length terms. Two methodologies are used by the tax authorities: the

comparable uncontrolled price method and direct assessment based

on available information.
Thin capitalization There is no formal thin capitalization legislation
but the deduction of interest on shareholder loans is subject to some
conditions and limitations. Interest is deductible provided the
shareholders stock is fully paid up, the interest rate does not exceed
the official annual rate and the debt-to-equity ratio does not exceed
1:1.
Controlled foreign companies No
Disclosure requirements No, but information on transactions
involving dependent entities should be maintained by the Moroccan
resident entity.
Compliance for corporations:
Tax year The calendar year normally is the fiscal year, although a
company may opt for a different fiscal year.
Consolidated returns Consolidated returns are not permitted;
each company must file its own individual return.
Filing requirements Accounts for income tax purposes must be
filed within three months of the end of the relevant accounting period.
Corporate tax is payable in four equal installments, based on the
previous years assessment. The actual amount payable is adjusted
in the three months following the end of the accounting period.
Foreign companies that have elected for the 8% default taxation (see
Rate above) must submit a declaration of their turnover before 1
April following each calendar year.
Penalties Interest and penalties apply for late filing, failure to file or
filing an incorrect return.
Rulings An optional advance pricing agreement ruling procedure
was introduced in 2015.
Personal taxation:
Basis Resident individuals are taxed on their worldwide income;
nonresidents are taxed only on Moroccan-source income.
Residence The following individuals are resident in Morocco for tax
purposes: (1) individuals who are habitually resident in Morocco; (2)
individuals who are present in Morocco for at least 183 days in a
given year, whether or not continuously; and (3) individuals whose
professional activities or center of economic interests are located in
Morocco.
Filing status Joint filing is not permitted; each individual must file a
separate return.
Taxable income All compensation received by an individual is
taxable, including: salaries and wages, allowances, pensions,
annuities and all other employment benefits; investment income;
property income; and income derived from the carrying out of a
business or profession.
Capital gains Capital gains derived from the disposal of immovable
property generally are subject to a 20% tax. Higher rates are
applicable in some specific cases. Capital gains derived from the
disposal of shares are subject to tax at 20%.
Capital gains derived from the disposal of a residence used as
principal residence for at least six years are exempt from taxation.
Deductions and allowances Various deductions and personal
allowances are available in computing taxable income.

Rates Rates are progressive from 0% to 38%.

Value added tax:

Other taxes on individuals:

Taxable transactions VAT is levied on all industrial, commercial

and craft activities, and on services rendered in Morocco, as well as
on import transactions.
Rates The standard rate of VAT is 20%, with reduced rates of 7%,
10% and 14% applying to certain transactions.
Registration All persons subject to VAT must make a declaration
of existence within 30 days of the start of their operations in order to
register for VAT purposes.
Filing and payment VAT returns must generally be filed on a
monthly basis.
Other Nonresident taxpayers carrying out taxable transactions in
Morocco are required to appoint a fiscal representative in Morocco.
However, under the reverse charge mechanism, a Moroccan
customer of a nonresident taxpayer who has not appointed a fiscal
representative should declare the VAT on the transaction on its own
VAT return and account for the VAT due.
Source of tax law: General Tax Code and law governing local
taxes
Tax treaties: Morocco has signed approximately 50 treaties of
which around 40 are in effect.
Tax authorities: General Tax Administration (Direction Gnrale
des Impts)

Capital duty No
Stamp duty No
Capital acquisitions tax No
Real property tax The transfer of property is subject to the 20% tax
on capital gains, but the tax payable cannot be less than 3% of the
transfer price. Undeveloped land can be subject to higher rates of
taxation ranging from 25% to 30%, depending on the period of
ownership.
Inheritance/estate tax There is no inheritance tax, but a gift tax is
levied at a flat rate of 20%.
Net wealth/net worth tax No
Social security An employer is required to register its employees
with the social fund and pay social security contributions based on the
employees salary. Both the employer and employee are required to
contribute and the employees contribution is withheld by the
employer.
Compliance for individuals:
Tax year Calendar year
Filing and payment The global income tax return, when applicable,
must be filed before 1 March of each year in the place where the
taxpayer has his/her habitual residence or main business.
Independent professional must file before 1 April.
Penalties Interest and penalties apply for late filing, failure to file or
filing an incorrect return.

Deloitte contact
Ahmed Benabdelkhalek
E-mail: abenabdelkhalek@deloitte.com

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